New Study Finds Private Higher Ed Institutions are Vulnerable in Today’s Political and Economic Environment

Affordability Concerns and a Changing Student Loan Landscape are Two Key Factors

ARMONK, N.Y.--()--A study released today by National Public Finance Guarantee Corporation (National), highlights a number of significant changes impacting the financial strength of the U.S. private higher education sector and provides recommendations for how schools can respond to these challenges.

“We expect to see greater differentiation in financial performance among private higher education credits as they deal with the impact of a weak economy, tuition that seems to perpetually increase faster than the rate of inflation and a changing student loan landscape with more federal government involvement,” said Tom McLoughlin, National’s Chief Executive Officer. “The most successful private higher education institutions will be the ones with strong student demand and healthy balance sheets, which together will help insulate them from a growing affordability problem.”

“Private universities may opt for short-term solutions to these challenges such as increased tuition discounting or increased acceptance rates,” added Jason Kissane, head of National’s Western Region and the report’s primary author. “But such decisions could hinder the institution in the long term. Similarly, reducing admission standards may impact the reputation that drives student demand over the long run. Ultimately, the same factors that distinguish schools and provide them with a competitive advantage - academic quality, athletic programs, location, successful branding, unique programs/majors, appealing student life characteristics and strong financial management - will determine which institutions are best positioned to meet these challenges.

“This study provides readers with an overview of the unique risks inherent to the private higher education sector as well as the credit factors which point to success,” Mr. Kissane continued. “We also provide a summary of key metrics for a sample of National’s exposure to private higher education credits broken into four geographic regions – Northeast, South, Midwest and West.”

This study can be found on National’s website at www.nationalpfg.com, along with studies of additional sectors in public finance such as Transportation, Public Power, Airports and Military Housing. National’s next sector study will be an analysis of the Investor Owned Utility sector.

National, headquartered in Armonk, New York, is the world’s largest U.S. public finance-only financial guarantee insurance company, with offices in New York and San Francisco. The company’s financial strength is highlighted by its $5.6 billion in claims paying resources, $2.1 billion in statutory capital and strong embedded profitability from its $499.2 billion insured portfolio and $5.3 billion investment portfolio.

Forward-Looking Statements

This release includes statements that are not historical or current facts and are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “intend,” “will likely result,” “looking forward” or “will continue,” and similar expressions identify forward-looking statements. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected, including, among other risks, the possibility that MBIA Inc., which is the ultimate parent company of National Public Finance Guarantee Corporation, or National will experience severe losses due to increased deterioration in its insurance portfolios; significant fluctuations in liquidity and asset values with the global credit markets; MBIA Inc.’s or National’s ability to fully implement their Strategic Plans as outlined in MBIA Inc.’s most recent Annual Report on Form 10-K; MBIA Inc.’s or National’s ability to favorably resolve litigation claims against MBIA Inc. or National and legal actions initiated by MBIA Inc. and its subsidiaries in connection with potential insurance loss recoveries; an inability to achieve high, stable credit ratings; and changes in general economic and competitive conditions. These and other factors that could affect financial performance or could cause actual results to differ materially from estimates contained in or underlying the MBIA Inc.’s or National’s forward-looking statements are discussed under the “Risk Factors” section in MBIA Inc.’s most recent Annual Report on Form 10-K, which may be updated or amended in the MBIA Inc.’s subsequent filings with the Securities and Exchange Commission. MBIA Inc. and National caution readers not to place undue reliance on any such forward-looking statements, which speak only to their respective dates. National and MBIA Inc. undertake no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such result is not likely to be achieved.

Contacts

National Public Finance Guarantee Corporation
Media:
Kevin Brown, +1-914-765-3648
Elizabeth James, +1-914-765-3889
or
Investor Relations:
Nick Sourbis +1-914-765-3385

Contacts

National Public Finance Guarantee Corporation
Media:
Kevin Brown, +1-914-765-3648
Elizabeth James, +1-914-765-3889
or
Investor Relations:
Nick Sourbis +1-914-765-3385